2018 has already proved to be a year of change for the UK energy sector, with moves afoot across the industry in policy, regulation, business models and investment. Companies new and old are beginning to enact their strategies for the coming years as the low carbon transition truly takes hold, but for some it’s only just catching up.
Despite only being established in 2009, this year has seen OVO Energy step forth into the mainstream on more than one front. Having built up close to 900,000 customers, making it the largest of the independent suppliers in the UK, OVO has made headlines throughout the last year in a series of surprising ways.
Partnering with Nissan on vehicle-to-grid charging projects, taking over London’s Truman Brewery to launch a suite of hardware products – including what could be the first domestic V2G charger available – and even taking on President Trump with a new take on the US-style attack ad to name a few.
Toby Ferenczi, director of strategy at OVO Energy who joined when the supplier bought aggregation platform VCharge, explained to Current± how the company is taking its approach to the new energy market.
“OVO was founded on the principle of providing better customer service and better value for money in a very undifferentiated electricity supply market dominated by the Big Six. We’ve grown very significantly with that in mind but as the energy industry changes, I think what customers are looking for is more sophistication.
“Really what we think customers want is renewable energy available when they need it at the lowest possible cost,” he said.
With almost 1,100 staff split across the company’s offices in Bristol and London, OVO is part of the new wave of energy companies with no generation assets, instead utilising trading and technology to procure renewables on the wholesale market for its 100% or other high percentage renewable tariffs.
The era of ‘EnTech’
This and its other propositions are made possible by over 250 on-staff software developers which take charge of the development of products and services required for the future.
“OVO over the last two or three years has been investing very heavily in our own technology platform to be able to deliver all of the new products and services that are going to be needed in the energy transition, as we shift from a centralised energy system to a distributed clean energy system, where you have lots of smart, digital and connected technologies available,” Ferenczi explained.
“We're entering an era of 'EnTech' and there's going to be a huge amount of innovation and grid transition to a decentralised, low carbon system. We see ourselves very much as a tech company so that we can innovate, we don't really see ourselves as an energy supplier anymore.”
The reliance on energy technologies to deliver its plans means OVO is well on top of its smart metering roll-out, with 5,000 installs carried out each week, leaving over half of the ‘EnTech’ company’s customers with smart meters so far.
According to Ferenczi, “this is critical to providing the new products and services” required for the future, taking advantage of half hourly settlements to provide the “key building blocks to the new smart flexible energy system."
A first for aggregation
This is where VCharge steps in as OVO’s proprietary energy intelligence platform, which Ferenczi suspects is the world’s first aggregation platform focused on residential loads. By setting the stage now to be able to utilise new technologies like demand response, energy storage, local renewable energy generation and particularly the electrification of transport and heat, OVO can create a virtual power plant that will play in the UK’s grid services market.
"We are able to create compelling customer propositions around each of those types of assets in the home...it allows us to utilise the flexibility...to help balance the grid which helps to add more renewables but also delivers lower cost energy to customers,” Ferenczi said.
“What's unique about OVO is if you think about what these new propositions, particularly those that utilise residential flexibility, they're actually very complex things to bring to market. You need a range of different activities: virtual power plants that can make decisions about what the grid needs; an IoT platform that enables you to connect all your devices; and you need an energy supplier that has access to smart meters and their data and can create innovative tariffs.
“Where we're leading is having all of those things under one roof which allows us to create these coherent propositions and get to the market sooner.”
These resources are intended to allow OVO to take advantage of what it sees as a shift in the retail energy market far more towards the consumer, with the aforementioned technologies creating a far bigger prize in flexibility that’s for the taking.
“There's a much greater role for homes and businesses to play in the energy system…they'll be much more flexible about how they can use [energy] and they'll be able to put it back into the grid at times of need, or store their energy.
“Ultimately we want to give customers control over the things they care about and then we manage the rest to deliver them renewable energy at lowest cost.”
Such thinking was behind the launch of OVO’s smart EV charger earlier this year, which can give customers much better control over when they charge their car, with OVO taking the reins for the rest of the time.
Ferenczi explained: “There's some residual flexibility that we can then manage to maximise value for the grid, whether that's providing ancillary services for National Grid, or the local distribution network operator, or providing value in the wholesale energy market.
“So we manage that complexity and the customer gets their customer satisfaction needs met and delivered clean energy for the lowest price."
Tackling transport and heat head on
The rise of EVs is clearly of upmost importance for OVO as the UK seeks to crack a way to decarbonise its transport stock. On top of its product launches, OVO has also launched an electric vehicle tariff, secured funding for V2G trials, and begun supplying clean electricity to the UK’s largest charge point provider as well as lamp post charging networks across London.
Ferenczi sees that this is inextricably linked to the company’s wider aims to boost renewables across the energy system while transforming it into the smart grid of tomorrow.
“The big shift we see is the rise in electric vehicles which will be much faster than anyone anticipated and you can’t electrify transport unless you have these smart flexible platforms that make sure EVs support the grid rather than damage it by creating constraints and adding infrastructure costs. These flexible technologies are essential,” he said.
“Similarly, if you want to electrify and decarbonise the heating sector as we very much feel we need to do, you also need these smart technologies to manage that…and can work in concert with the grid.
“The flexible technologies that we're working on is in the middle of all of this as it helps you add more renewables, connect more EVs to the grid and helps you electrify heating. With all of those things combined, there's a very big prize there for our society."
Spreading the word
However, in a market still dominated by the Big Six energy suppliers and their (albeit decreasing) focus on dirty fuel, OVO – like many other suppliers – is still subject to the whims of the consumer market.
“There's definitely a portion of the market that's very engaged but you see a really large proportion - something like 60% of the UK - who has never switched energy supplier,” Ferenczi explained.
“We do have a role to play in making the public aware of the change in the energy system that's coming and actually how customers can have a big impact on the environment and on climate change.”
Such efforts have seen the company deliver a mocked up Donald Trump beating in vain on a solar panel, a mainstream advertising campaign across the country, and an inspiring ad delivering the immortal words of Network’s Howard Beale to a choking world: “I’m mad as hell, and I’m not going to take this anymore!”
“Our advertising campaign has been about increasing awareness that you can actually do something. You have a choice about where your energy comes from, how you generate your own energy and how you heat your home. A big part of it is simply getting the word out.”
How long it takes for consumers to make this choice remains to be seen, but OVO – along with it has to be said many other ‘EnTech’ suppliers – is not waiting around to find out. Ferenczi and the rest of the team has set out to deliver a low carbon and stable transition at cheapest cost to consumers; something everyone should be able to get behind.
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